Are Doctors Investing Properly For Retirement?


Fidelity Investments conducted a study that analyzed the retirement behaviors of over 100,000 healthcare professionals including 5,100 physicians.  The results are startling.  Even though physicians average an annual salary of $300,000, they are not saving enough for retirement.

In Physicians News Digest Rick Mitchell, executive vice president of Tax-Exempt Retirement Services at Fidelity Investments stated “This analysis reveals that physicians are not as financially prepared for retirement as one might think.” Income replacement statistics tell the story.  Retired physicians are only replacing 56% of their income in retirement which is considerably lower than 71% which is the norm for someone who has earned at least $120,000 annually.

There are legitimate reasons for their lower rate due to residency programs that last into a physicians early to mid 30's. They don't hit their prime earning potential until their early 40's and when you add on 7+ years of student loans that could amount to as much as $300,000, some of the study's findings aren't surprising.

Mitchell also mentions that since a physicians earning horizon is much shorter than other professions, they need to to seek guidance on their appropriate investment mix at all stages of their professional life.  Fidelity also suggests that physicians should save at least 20% of their yearly income, but with regulatory changes and a decline in reimbursement rates, saving 20% of ones salary per annum is a much tougher task.

The study also showed that pre-retiree physicians tend to have over aggressive asset allocation. In conclusion, due to physicians unique academic and professional circumstances in relation to other occupations, the need for sound a investment strategy has never been more important.

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